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Updated Airport Growth for Sydney Airports

KSA Under-Utilization and Peak Charges
SATS technological challenges?

Discusses accuracy of airport growth predictions,
and updates the Second Sydney Airport forecasts on the basis of
data from 1997 to 2002. These show worrying increases in forecasts.
Peak charge increases suggested to manage demand instead of
building airports for a few days a year, and the possibilities of a
technological shift to air-taxis based on Small Aircraft
Transportation Systems is discussed.

1997 Predictions

At the time the Federal Department of Transport (DOT) announced
it's plans for a second airport in the Guidelines for the Draft EIS
for the Second Sydney Airport (Jan 1997), the DOT was forecasting
7% per annum exponential (exp) growth in demand for air travel in
Sydney. This was even higher than the best regression fit to the
historical data available at the time which gave 5.9% per annum
growth. See curves DOT 1996, and Best Exp Fit 1997 in
Figure 1 Below.

By the time the Draft EIS was released in late 1997, the DOT
forecast had been toned done to 6.1% growth to 2000, then 4.6% to
2010 then 3% to 2025 (Draft EIS curve in Figure 1).

On release of the Final EIS in July 1999, the DOT understandably
wanted to lower its earlier forecast further. The result is
labelled Final EIS Prediction in Figure 1. The 1997 logistic
model is almost indistinguishable from the Best Exp Fit 1997, and
similarly the 2000 logistic and Best Exp Fit 2000.

Figure 1 - Historical Accuracy of Forecast

Figure 1 shows how much poorer the 1997 Draft EIS
forecast predictions turned out to be. Table 1 shows the relative
error for each of the main forecasts (relative error as a fraction
of actual demand)

Logistic Equation Proven

The logistic equation forecast from 1997 made by this site (see
Logistic Equation prediction of airport
growth) showed better fit with the actual data from 1997 to
2000 (see Table 1 above, and graphs) than either of the alternative
DOT 1996 or Draft EIS 1997 forecasts.

Updating the Exponential Models

What do the regression based exponential methods tell us if
updated to account for the 1997 to 2002 data ? These forecasts have
been updated in two steps - after FY 2000 and FY 2002 data became
available:

Figure 2 - Long-Range Comparison of Forecasting
Models

Firstly, the exponential model in 2000 predicts almost the same
growth (5.84% instead of 5.87%), but with a down-shifted curve
(starting at 3.22 million passenger movements per year instead of
3.26 in the year 1966, compared with 2.70 mpy actual in 1966). Over
the period to 2025, this lowers the prediction from 110 mpy to 100
mpy. The few extra years data don't make much difference. Adding
the two years 2001/2002 make barely 1% difference, lowering the
2025 prediction down to 99 mpy.

Logistic Model Updated

Updating the logistic model shows less drastic change. Using
data to 2000 raises the 1997 logistic predicted 2025 demand by 5.4%
from 37 mpy to 39 mpy , and 42 mpy using data to 2002. This is a
worrisome increase.

It would seem that the extra few years of good growth is
overcoming the two bad years in 90/91. But interpreting the changes
to 2002 is risky - as it's difficult to determine how much of the
2001 spike was due to the Olympics effect and how much of the 2002
fall is due to the Sept 11 2001 decline in air travel. The 1990/91
dips corresponded to a widespread recession in Western economies,
and some of the decline in 2002 may be due to the onset of a
similar recession (which of course are never admitted by
politicians of the day). Nevertheless, it seems that KSA will have
reached it's peak capacity by 2020.

There was a lull in demand in 1999 preceding the Olympics, made
up for by strong growth in 2000. Financial Year 2001 should also be
expected to show strong growth (as this is when the Olympic
occured). While tourism chiefs are hoping for this growth to be
sustained, the Olympics brought fewer people than expectations, and
it would not be surprising to see 2002 demand to fall back to the
underlying levels. The Olympics produced a peak international
passenger movement that was only 8% higher than a two-years earlier
figure (so average peak growth is around 4%). Together with the
fact that 42% of the Olympic peak day were arrivals, this suggest
that growth isn't that spectacular.

The DOT's latest (Final EIS) forecast shows it was
clearly expecting some attenuation of the growth rate. This is
tantamount to saying the future will be different to the past. It
really then becomes a matter of guesswork as to what the "death
rate" may turn out to be.

By fitting a logistic equation to the historical data, plus the
DOT Final EIS future, you can produce an estimate of the
death rate they have implicitly guessed. A logistic curve with
b = 0.0673, d
= 0.000948, and P0 = 3.44 gives the best fit, and the
upper limit for long term travel demand is 71.4 mpy. This logistic
curve fit to the Final EIS predictions has a mean square
error of 0.94 on the historical data, compared to the best (least
square error) logistic fit to the actual data which has mse of 0.86
and gives b = 0.0582, d = 2.32 x 10-6, and P0 =
3.44

The Final EIS guess could be an underestimate. Any second
airport may need to be much larger than presently thought, and KSA
may need substantial expansion.

KSA Under-Utilization ?

Doubling KSA would undoubtedly disturb the vast hordes living
under its approaches. But it seems feasible.

Take the peak international passenger movements (from October
2nd, 2000) of 45,000, and multiply it by 365 days per year, you get
a theoretical capacity of 16.4 million international passenger
movements; as of July 2000, all we'd achieved was 8.04 million. So
KSA is running at about 49% of its theoretical capacity -
suggesting there is room for doubling - without aircraft getting
any bigger than they are today.

This raises two interesting point: can peak lopping manage
airport capacity better, and what if aircraft get smaller than they
are today ?

Expanding Airports v's Peak-Lopping

The EIS forecasting has been based on coping with an
ever-expanding total passenger movements per year. But what is
really critical is the peak capacity. The question needs to be
faced: can we afford to be building airports to suit the worst few
days of peak holiday periods ? Can the users afford to pay for
something that's only going to be used a few days a year ?

A similar question has arisen in the electricity industry -
generators (particularly the privatised ones) are claiming it's not
economic to build power stations to cope with a few peak days in
winter and summer. The suggestion is that load-shedding (brown-outs
and if necessary black-outs) should be accepted by the public
instead.

The public includes some people who need electricity to maintain
their health (e.g. kidney dialysis machines), or others who'd freak
out if caught in lifts in city buildings. If you can suggest
peak-lopping for something as critical as electricity, why not for
air travel ?

Travelling by air is a luxury - and not one of life's
essentials. Airlines already get "fully booked" at peak periods,
and don't try to provide enough planes for whoever might want to
travel on a few particular days.

So why not plan to allow airport capacity to restrict travelling
capacity at peak times ? It might even be smart to do it,
especially if supported with surcharges on landing rights at peak
times. This would provide funding for capacity expansion, and
ensure that monopoly rents are not inefficiently captured by lazy
airlines. The regulation of the airport operators return on assets
will ensure the funds find their ways into capital works, whereas
there's no such restraint on the airlines.

Air ticket prices are already substantially higher at peak
holiday period times (as indeed is accomodation and everything else
related to the travel industry).

Why the hell aren't airport landing charges
structured to reflect this too ? This is a serious
deficiency in the airport pricing proposals put to the ACCC in 1999
and 2000, which nobody seems to have cottoned onto.

The Eclipse is the first of a new-era of mass-produced low cost
GA jets, projected to have direct operation cost of just $A0.77 per
km (or $US0.56 per mile) and cruise at 658 km/hr (355 knots). For
comparison, the Dash-8, a propeller driven aircraft popular on
Australian regional routes, travels at only 280 miles per hour.

The Eclipse is likely to spawn an entirely new air-taxi industry and steal the lion's share of
the lucrative first class and business class travellers market from
traditional airlines. No wonder most of the major airlines are
looking to establish cheap no-frills subsidiaries (see Qantas new
subsidiary Australian Airlines)-
they can see the competitve threat to the top end of the market,
and have to develop alternatives for their survival. How long
before the airport planners feel this wind change ?

NASA's SATS program argues that the move to a new class of
mass-produced GA jet will result in higher speed travel by cutting
down on the travel times and delays incurred in using traditional
hub-and-spoke airport systems.

In August 2002, a Sydney-Brisbane business trip (around 734 km
or 458 miles), the average speed was 220 km/hr or 140 mph
door-to-door (Bankstown, Sydney to Toowong, Brisbane). The trip
took well-developed motorways to/from the airports, and a 767 from
KSA (cruising speed 830 km/h or 516 mph). On the return trip later
that day, the flight was delayed one hour, giving 173 km/hr (110
mph) average speed. Sure, the 767's and 737's can cruise fast, but
the time taken to travel to/from the airport, taxiing, boarding and
waiting time at the airport, neutralize their speed advantage. The
scheduled air journey time of 85 minutes was only 42% of the
overall journey time, and the 30 minute pre-flight check-in wait
time was another 20%.

SATS technology leads to the distinct possibility that more GA
airports could be developed around the city to reduce travel times
and service this new market (American cities already have lots of
GA airports). Traditional airlines may be left only with less
time-constrained economy class passengers who are prepared to
travel out of peak hours and tolerate large airport delays.

Sydney's KSA is ideally situated to play a major role in
supporting an air-taxi market - provided the long-haul cattle-class
airlines can be persuaded to move out. Bankstown Airport, formerly
a GA airport, is likely to have a more limited role in supporting
air taxis because of the one hour travel times to the CBD in peak
hours and its distance from the homes of the travelling elite.

Australia's politicians, who like to fly business class, may be
among the early adopters of this new SATS technology. Their
self-interest can be relied upon to ensure that airport subsidies
remain in place for their preferred modes of travel.

But once their needs are taken care of via luxury air-taxis, how
long will it take for them to realise large scale hub airports no
longer need to be situated within the city limits and can be
operated more effectively from cheaper semi-rural locations ???